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Complete Guide On How To Start A Restaurant Business In India

Despite the substantial risks and the tough hours, owning a restaurant business is one of the most rewarding experiences of your life. If you too have nurtured a lifelong ambition of starting up a restaurant, and don’t know how to go about it, or are currently in the middle of setting up your first restaurant, then this article is just for you and will tell you in detail, how to start a restaurant business in India.

Restaurant Industry in India

Indian Restaurant Market is one of the fastest growing in the world, and the foodservice industry is expected to reach INR 23000 crores in 2018.

Thanks to the rising incomes, rapid URBANIZATION, increasing working population and technological advancements, more Indians are eating out in restaurants.

How to start a Restaurant in India

Considering the massive opportunity that the Indian F&B industry holds for both future & existing restaurant businesses, you must not waste any further time and dive, rather quickly, into this lucrative domain. So what are you waiting for? Follow this step by step guide that will solve all your queries on how to open a restaurant in India:

Decide the concept of your restaurant

Get investment to fund your restaurant business

Evaluate restaurant costs involved

Decide the location of your restaurant

Get all the licenses required to start the restaurant business

Get workforce for your restaurant business

Design a stellar menu

Arrange vendors and suppliers for your restaurant

Install the right technology at your restaurant

Now, once you have garnered the knowledge about the steps that are important for you to start a restaurant business in India, let’s dive deeper and know what exactly needs to be done that will help you to open a successful restaurant business in India:

1. Decide the concept of your Restaurant

The first thing to consider while starting a restaurant business is deciding the idea. You need to keep many things in mind before deciding on a concept, the major one being the amount of capital you have for investment. The Average Price per Customer (APC) gives you a fair idea about the average amount of money a customer would spend in your restaurant.

Once you have decided on the concept, you must ponder into the theme and cuisine of your restaurant. The interiors must be in sync with your restaurant theme. Following which you should prepare a business plan for your restaurant as it would help you in planning the future development of your restaurant business and you can present it to any potential investor. Learn how you can write a winning restaurant business plan here.

2. Get Investment to fund your Restaurant Business

Most aspiring restaurateurs’ dreams never see the light due to lack of funds, and this is one of the most important things to consider when you think of opening a restaurant business. Firstly, depending on the concept of your restaurant you must finalise on how much capital is required to start a restaurant in India when you have the numbers, then you can go about with these three ways through which you can raise money for your dream restaurant:

Self-funding – If you have enough money in the bank, then congrats, you have crossed the first hurdle of opening a restaurant. It is also a good idea to open a restaurant in partnerships, as it reduces the risks of investment.

Loan- You can take a loan to fulfil your restaurant dream. However, securing a loan from a bank may include hassles as they look for collateral or someone who can underwrite the loan.

VC/Angel funding- Getting investors on board can be difficult, especially if yours is a first-time venture. Investors usually look for your restaurant venture’s growth potential, quality, and the scalability of your business model. The performance of your first few outlets is taken into consideration before one agrees to invest in your business.

3. Evaluate all Restaurant Costs involved

Restaurant costs are a significant part of running a restaurant and need to be evaluated and planned carefully. Below are the significant costs involved in starting a restaurant business:

Food Costs- Food cost is the cost of all the raw materials used in preparing a dish. Ideally, the food cost should be around 30-40% of your menu price. Read how to control your restaurant food costs here.

Overhead Costs– Overhead costs are the other expenses that are not related to food or labour. These include:

Rent- The rent covers a significant part of your restaurant costs, and is profoundly affected by the location of the restaurant. However, the rent should never exceed 10% of your total revenues.

Interiors– You can decide on the interiors based on your restaurant concept and theme, and your budget.

Kitchen equipment- Purchasing right quality equipment may seem like heavy on the pockets, but they always recover their costs in the long run. Know about the various types of essential equipment without which you cannot run a successful restaurant, here.

License- Restaurant licenses are an essential expense of your restaurant, and cannot be ignored. Based on your establishment type, the license fee varies. We have covered the topic of restaurant license in detail below.

POS- The new age, modern technology POS can smoothen your restaurant operations like never before. The price of POS depends on its features and functionalities, that should be chosen considering your restaurant needs. We have covered the topic of POS below in detail.

Marketing- You should ideally spend 1-2% of your revenues on marketing your restaurant. There should be a perfect balance between offline and online marketing. Word of mouth marketing, along with digital marketing can do wonders for your restaurant.

4. Decide the Location for your Restaurant

The location is an essential factor to consider while discussing how to start a restaurant business, as it can determine the success of your restaurant. While choosing your restaurant’s location, it is a good idea to identify your competitor in that area and gauge their progress and understand their business model. The competition needs to be assessed not just in terms of cuisine, but also the type of dining experience they are offering to their customers – casual dining, fine dining, QSR, etc. Evaluating the competition would help you understand the customer base that hovers in that area, their pocket size, and their preferences.

Other factors to be considered while deciding the location of the restaurant business in India, are-

Visibility and accessibility- The restaurant should be located in a place which is easily visible as well as accessible. Upper floor locations are generally not considered suitable as their visibility is low, and customers also find them difficult to locate. A restaurant right in front of the road and on the ground floor has higher footfalls.

NOC- Before you open your restaurant, you would also need No Objection Certificate (NOC) from at least three of your neighbours.

5. Get all Licenses required to start a Restaurant Business

You need to acquire licenses from the government to run a restaurant business in India. The cost of obtaining these licenses varies, depending on the size of your venture. It is advisable to apply for the permits early, as they may take a lot of time to get approved. Here is the list of significant licenses required to open a restaurant business in India:

Trade license from the municipal corporation- Depending on the size of the restaurant, the cost incurred is from Rs 10,000 to 1 lakh. However, the actual license fee ranges from Rs 5000 to 10,000 for a small restaurant. The licenses are issued for a financial year and need to be renewed in March every year.

FSSAI-One needs to get a license from the Food Safety and Standards Authority of India (FSSAI) to operate a food business. The size of your venture, turnover, installed capacity, location etc. are factors in obtaining an FSSAI license and costs around Rs 5000 to 10000. For more help on FSSAI Registration, you can refer to this guide.

GST Registration- Restaurants are required to register under GST and get their GSTIN Number. GST registration is state specific, so if your restaurant has outlets in different states, then you need to have a separate registration for each state. You can read more about GST Registration for Restaurants here.

Professional Tax license- You need a professional tax license for employing salaried staff. This is payable on a monthly basis for all restaurant staff earning above Rs 10,000.

Liquor License- Obtaining a liquor license is the trickiest of all and is also pretty expensive. It is advisable to apply for the liquor license early, as this permit takes a lot of time as well.

Business Registration- You need to register your business as a partnership firm or a Pvt Ltd company. You’ll need to file annual returns, audit your finances etc. Hire a CA to help you with the economics of your business.

There are a few other licenses required as well such as fire safety certificate, pollution control license etc. Learn more about all the essential licenses necessary to open a restaurant here.

6. Get Manpower for your Restaurant Business

Hiring the right talent and retaining them is one of the biggest challenges while running a restaurant business in India. Hiring through referral is very well accepted, with existing employees referring their friends and family. As a first-time restaurateur, you can hire through the traditional way: set up an advertisement in the newspaper, put up ‘We’re hiring’ posters, or hire through agencies. There are also many active groups on Facebook and Linkedin, from where you can source talent.

Service staff- The waiters, housekeeping staff, busboys etc. are your service staff. Since they have to interact with customers, they need to be good at communication and must be trained appropriately.

Management staff- Your restaurant’s manager, chef, cashier, store manager etc. comprise the management staff, and they need to be educated as well as experienced.

Hiring the right chef is extremely important for your restaurant as your food is what’s going to attract your customers. Apart from cooking, your chef also designs your menu, keeping in mind the ingredients that are readily available, and train and lead the staff to prepare and present the dish. Therefore, an experienced chef is a must for your restaurant. Before you start a restaurant business, you must also remember to train your staff not only regarding their job but also on how they should serve their customers to deliver stellar customer service. Find out how to create a Human Resource Structure for your restaurant here.

7. Design a Stellar Menu

The next step to start a restaurant is designing a menu. A smartly designed menu can make a significant impact on your restaurant food costs. The menu should comprise of items that can be prepared quickly and use local or readily available ingredients. It is advisable to serve dishes that use similar ingredients, which will help you to reduce your overall food cost and the scope of the generation of waste.

8. Arrange Suppliers & Vendors for your Restaurant

A healthy relationship with your supplier and vendor is essential for the smooth functioning of your restaurant. You must have at least two-three vendors in each category. This would help compare prices, and will also serve as a backup in case some problem comes up with one.

You must always have two days worth of stock in your inventory in case of emergency situations. The items must always be delivered in the morning and checked every day. Both quality and quantity check must be done at the closing time of your restaurant. It is always preferable to have long duration contracts with the vendor as it helps in maintaining the consistency of your raw materials. You also need to check the Trade Identification Number (TIN) of the vendor before you give him your restaurant’s supply contract.

9. Install Right Technology at your Restaurant

Restaurant technology is often the most ignored part of running and managing a restaurant, though perhaps the most important. With new age modern technology, the robust POS has come up with a number of integrated features that has streamlined the restaurant operations to a great extent. Niche restaurant technology solutions are available for different types of restaurants.

The idea of owning a restaurant is excellent. However, starting a restaurant from scratch and running it successfully is a humongous task. With this article, we hope we were able to educate you about how to start a restaurant business in India. If you still have any doubts or questions regarding opening or managing your restaurant, do let us know in the comments below, and we promise we’ll help you out 🙂

Note: The figures and facts mentioned in this article are in accordance with the Indian restaurant space.

Hi Prateek..
Opening a new venture needs quality analysis of the place and target customers. APC and COS are important factors to run a restaurant business. The location in Delhi is very tricky and demographic factor with dietary issues are taken into consideration. For exp. muslim dominated or Punjabi dominated areas in Delhi will prefer Non-Veg theme based restaurants whereas Baniya or Brahmin populated areas will prefer vegetarian and thali concept of restaurants.When Space is concerned 30-40% of the total carpet area is consumed by BOH( Back of House ) activities and 60% space is for dine in. The number of covers in a restaurant depends on the concept whether its a fine dining concept or QSR etc. Generally one person take 15 sq ft space in a sit down restaurant. for eg. 600 sq ft area can accommodate 35 pax. keeping the rest space for movement and cashier counter/beverage counter. running cost of restaurants is very tricky it all depends on your menu, COL( labour costs), Rental part, overheads etc. The ideal COS( Food cost ) is 30-35%, Labour 18-21%, overheads or COSV 10-15%( gas,electricity, diesel, coal etc.) and misc expenses.So if you see the profit percentage is 10-15% if the volume is good enough and if the restaurant runs as per norms like licenses, marketing expenses time to time, incentives to staffs etc..
To reduce project cost and operational costs rent part should be less, hiring multi skilled work force, keeping menu simple and elegant, breakages/spoilages should be within limit,preps and forecasting should be strong and foremost hiring a hospitality professional for a new project is utmost. Old BOH equipments in good working conditions can drastically reduce costs. Branding and promotions with strong CRM/ loyalty programme should be carried out in 2nd phase.

This is Ashwin from I&SB. We can help you with setting up a restaurant for the above mentioned budget. We can speak about the specific on a call. Feel free to call me between 10am and 7pm any day. We can help you with everything from concept development, design the menu, curate the menu, interior design, branding and marketing. Please have a look at our website iceandsodabrands.in

It was an amazing experience to find your site this morning. I found your information very essential. Your ideas are very advanced and always highlight the important aspects of the topic. Thanks a ton for giving your precious time in writing this excellent blog.

Thank you! It’s been a pleasure to read your article throughout, each and every single detail is mentioned step by step. It’s just what I needed 🙂 you have been of tremendous help. Need more such information and knowledge so keep writing, you do a great job! Thanks a ton once again ☺️

Hi very nice and useful article for beginners. I want open restaurant in pune any one intersted for partnership, can anyone is intrested in kitchen department like chef ,or any other department plz contact me Thank you.

Very Helpful Article. I am going to start a small restaurant along with my friends. Can anyone Suggest me a different Menu and theme in-order to attract the customers? Please suggest me some ideas since i am beginner in starting of Business. thank you.

Hi Kartik.. If you are still open, contact me on 9930455015 .. I have multiple projects lined up and I can help you with yours too ..Just for the background we have worked on more than 20 restaurants uptill now ..contact me on 9930455015

Thanks for the Great Article!!
Let’s say I am still doing graduation and i have entirely no relation to the restaurant business.
But I have had a idea for a cafe since last one year.
I live in kanpur.
How should I go about it?
How should I convince people?
Whom should I talk to?
Though I have just joined my family business.

hi me and my friend who is a renowned chef in this industry for past 10 years..We are plannimg to open a fine dining restaurant in mumbai or delhi .. need a serious investor for our project .. any contacts appreciated ..we have got more than 14 restaurants set up done over these years who are running extremely well..
kindly contact on 9930455015

I am planning to open a small 35 covers restaurant in Kolkata by October this year with an extensive experience of 18 years in Hotel Industry. I worked in India and abroad in senior management. Sincere partner and positive guidance in anything related will be highly appreciated.

Thanks for this amazing information
as a entrepreneur I am very great full to you!
I have a 15lakh budget and starting a QSR/cafe business
but I am skeptic as my business model already exist in the market
location-mumbai

If any one Interested to Start Dhaba in Rajasthan, NH12, I have land on this highway(on NH12, Jaipur- Kota), it is near to Deoli, Dist Tonk ( 167 KM from Jaipur and 90 KM from Kota) this is 4 lane Highway…
Kindly contact 09818550131, I am open on Partnership Concept & also ready to build the Dhaba / Restaurant as per mutual agreed terms….
Facility already available – Land in covered with boundary, water available, Electricity available…
Please contact if any one interest… I do not have Chef expertise. Workers can be arrange from local area…

Hi, POSIST team,
It was amazing overview for new entrepreneur to start a dream restaurant,
I am on verge of starting my own catering, but this article gave me an idea how I can plan out my catering business in Pune.
I came back to pune after a year gap. Just browsing internet to find something which help me to project my business plan, so found this wonderful article. Keep going guys… Good luck.!!!!!!!!!!!!!

Hi, My name is Digvijay from Navi Mumbai, I am Looking for Investor for my Lounge (Pub-Bar) project in Navi Mumbai, Investor will get 60.00 Lakh to 1.60 Cr. profit per annual.
If Anyone Interested kindly contact on -8779730182

It’s really amazing information to new beginners. I’m planning to build one restaurant. It’s my dream. 15 to 20lac that was my budget.bcz of this information I learn a lot . Thanks team and keep posting such a good things

Fantastic article helpful for new people who wish to start a restaurant. Myself Gireesh Nair. Would like to start an authentic south indian veg restaurant in Surat – world’s 4th fastest growing city. Looking for same wavelength people as investors. Target investment is around 50-70 lakhs. This will be a 9 am to 11pm working restaurant. If anybody interested, please watsup me on my mob: 9924303222

i am Soni,,, i also want to open a brand new concept in jaipur for a restaurant.. i have 16 years experience i worked as chef in france for 10 years and in 5 years in india… i need partners for my concept it is unique concept … please contact 9811633623 , i am in gurgaon. i want to open restaurant in other cities also after that…

We are looking for a partner or an Investor for a Cafe/Bistro in upmarket area in HRBR Layout in Bangalore. Its an already running Cafe with feedback of 4 and its making profit. We want to take over this place. If anyone interested either in Partnering with us or just want to invest kindly get in touch with us on 7338090027 (You can Whatsapp)

Nice articles.
Dear All beginners,
I am starting my small restaurant in Pune & it would open by first week of July.
I am interested to open more small restaurants across Pune and looking for skilled persons, chefs and investors for partnerships.
If anybody interested to talk please get in touch with me +91-8928-52-1234
Or email santosh_sanap@ymail.com

Hi
This is Srinivas From Bangalore
We are already operating restaurants in the middle east and are looking forward to expand in the below mentioned cities ( not limited to) – Bangalore, Mysore, Hubli, Hyderabad, Vijayawada, Chennai, Coimbatore.
We are looking at suitable locations for opening Vegetarian restaurants.
we are also in the process of Finalizing a Brand for South Indian Packed Snacks.

Hi,
This is Venkat from Chennai. I have a Vaccant plot of 7400 Sq.ft on ( GST Road ) National Highway Chennai to Trichy road at Pakkam in between Madurantagam and Melmaruvathur Famous temple. Its fast developing. a couple of highway restaurant in the range of 2 kms distance. I have a plan to either let our bear land or build a small restuarant and let our if an opportunity arise.

Hi
This is vishal Agarwal from Kolkata and currently I am employed in private limited company but I have a passion for cooking and want to open up a restaurant in kolkata . If any one has a plan or new ideas on how to start a good restaurants they can contact me at 9836355510 .

Im planning to start a restaurant in bangalore and looking for a nice biryani frachise like “BIRYANI KITCHEN”.
Can anyone suggest me a nice frachise for biryanis and im also lookinf for like minded partners.
My mobile number is 9986171881

Hi,My name is Joyjit Palit.I am very passionate about opening a Dhaba style restaurant in my small home town Berhampore,WB.Need an investor for setting up the business….can anybody help.
*can discuss the concept
Contact or whatsapp-8670738097

Hello everyone
This is venu from madurai.
Basically I am Equity advisor completed my MBA but my passion was in cooking so did my pgdca course now working in westin hotel Hyderabad. Now days with training also I am doing research on chettinad cuisine. Above all everything have business motive. If any body wants to join or need some suggestions free to call 9698470395 also planning for restro .

Hi! It’s Manish .I want to start a QSR business. I have more than ten years of experience in pizza and Burger restaurants like Domino’s pizza, pizza hut, subway, MC Donald’s. I have full proposal. I need a series invester. Kindly contact me on this number. – 9987563234

Hi Everyone,
Very good information Thank you so much for posting.
This is Lakshmi From California USA.We would like to start a good pizza,Sandwiches,frozen yogurt&icecreams restaurant in Ongole A.P. How much investment needed for that? How long will take to get all Licenses and How can we get staff like chefs ,Servers and management staff.please suggest me if anyone already has experience running a pizza business.How is the profits?

This is a great article for the beginners, I am Nagaveni from Bangalore wanting to start a small scale restaurant in near Dasarahalli Metro station. We are ready to invest up to 10 lacs and have submitted our requirements in indiamart to purchase the hotel equipment’s but need an expert this field from your end to guide us through it. We would like to know the charges for the same.

Hi i am from Mumbai looking for a partner who shares the same passion for food as i do. I have a concept in mind which suits the lifestyle of mumbai. Nice article by the way. Looking forward to establish my very own food joint. If interested please contact on watsapp +91-8693075308.
Thanks.

Hi everyone,
I am a youngster and want to open my own restaurant. I have a plan for the it. As I am myself a good cook, i have a concept of a totally different dish, in Indian flavor and can be served at chain restaurant. I need some expert advice, and a chef who is willing to help to develop the dish. Please feel free to contact. Leave me a whatsapp message as i may not answer unknown numbers, or email me. +91-9594505854 shashanktiwary@outlook.in

I am Abu from Kolkata. I have a land in very premium place in Kolkata (Newtown, exactly opposite Ecco Park, Walking distance from Major Arterial rd). I have plan to build a house next year (from Apr, 2019). Also I am planing to open a restaurant on the Ground floor. I am doing service and I don’t have any knowledge in any business. Please suggest me the followings-
1. How big should be the area of the restaurant (The ground floor carpet area will be 1500 sqft)? Should I consider first floor as well? In that case it will 3000 sqft.
2. What type of restaurant I should open?
3. How much will be the initial investment (It is my own house, so no rent)?
4. Should I look for some experienced partner?

Hi All,
I am a working Professional. i have a Very nice Location Near the Govardhan/Vrindavan. This place is Famous because of Birthplace of Lord Krishna. Every year More than Several Crore tourist visit this place. this Location is Perfect for opening a theme based restaurant. If anyone is interested in taking the place on rent. reach me out at madhvendra@live.in / madhvendra365@gmail.com

Hi
I am planning for a restaurant in Kalyan (Mumbai)but because of lack of funds and as I have no collateral no bank is intended in giving loan either….
Anybody who is willing to listen to my plan where I will be giving my 100%…

Hi, Im Aditya from Mumbai and have a 5000 sq.ft open terrace near ‘Opo’ /metro area at Andheri, Mumbai on 11th floor with appropriate permissions and parking available. If anyone with past experience is interested in opening a Terrace Cafe in such a popular area they may Whatsapp me @+91 9699969691. I would be interested in a partnership agreement where I would provide the place and do smaller things such as marketing etc. The partner would have to put in his own money and manage day to day running of the place.
Do the others know how and where I can find such investors? Thanks Everyone!

The initial investment is one of the major issues when starting a restaurant in India be it a QSR, fine dining, etc. You can invest in a food truck to get a taste of what the restaurant industry is like. The initial investments for starting a food truck is less (approx 10-20 lakhs). The competition is also comparatively low in the food truck business. Starting a restaurant in the first place can be a little daunting. If you really wish to open a restaurant in India but keep questioning your decision, opt for a food truck.

The article is very interesting, I related to each and every point, especially the content under Arrange Suppliers & Vendors for your Restaurant. Can you please give me a few points on restaurant kitchen setup cost in India and how can we start this?

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